Ongoing Equitization of Major State-Owned Enterprises Positive for Vietnam

Mar 02 2018

The ongoing equitization of major state-owned enterprises (SOE) will be positive for Vietnam, opening the door to more foreign investment and competition needed to reinvigorate the domestic oil and gas industry.

That is the view of oil and gas analysts at BMI Research who noted that this equitization process is gathering pace across the country’s oil and gas sector, in line with the government’s plans to attract more foreign direct investment into the sector and boost competition, while raising funds to support the state budget.

“After successfully executing initial public offerings for Binh Son Refining and Petrochemicals Company, PV Oil and PV Power in January 2018, the Ministry of Planning and Investment will move to wholly or partially divest stakes in a further 242 state-owned firms over the course of 2018,” the analysts said in a brief research note sent to Rigzone.

This divestment drive will be ‘especially positive’ for the downstream sector, which remains in much need of additional investment and upgrades, the analysts stated.

“Domestic refineries require substantial new investments to upgrade feedstock flexibility and fuels quality, to compete with regional rivals. In addition, more investment is needed to shore up Vietnam’s underdeveloped and underfunded fuels transportation, distribution and storage infrastructure, which remain a major hindrance to stronger consumption growth,” the analysts said.

Interest in Vietnam’s planned oil and gas IPOs will be high, according to BMI.

“Acquiring shares in SOEs can allow foreign entities to directly or indirectly participate in and profit from Vietnam’s robust fuels consumption growth story, which remains among the best in the Asia-Pacific region,” the analysts stated.

“A host of international firms from across Asia, Europe, the Middle East and North America have already taken part or expressed interest in participating in future SOE share sales,” the analysts added.